Why Should Government Respond Differently to Natural vs. Economic Disasters?

With millions of Americans struggling to recover from Sandy, few people question that government has a central role to play in rebuilding battered communities in New Jersey and other states.

Natural disasters are often highpoint moments for the public sector, reminding us of the power of common institutions that allow citizens to help each other in times of need. The residents, say, of sunny Los Angeles needn't do anything special at this moment, because they have already been doing something—helping fund FEMA with their tax dollars so that it has the capacity to respond to unexpected events like a "Frankenstorm."

But here's a question: If most of us take for granted that we should be there for our fellow citizens during natural disasters, using the tool of government, why is it so controversial that we should also lend a helping hand during man-made economic disasters? Why are unemployment benefits under attack in numerous states, even as millions remain jobless through no fault of their own? Why is an idea as obvious as a direct government jobs program off the table in Washington?

The answer is no great mystery: Critics of a government safety net tend to think that individuals will solve their own economic problems if government isn't there to coddle them—and also that private charity would do the job of helping people, and do it better, if government weren't in the picture.

Both assumptions are wrong.

Even if you believe that individual willpower matters a lot, as I do, it's naive to imagine that individuals can do much in the face of large-scale economic downturns driven by structural factors that are national and even global in scope. If there are four job seekers for every job—and for several years straight—no amount of volition is going to help most individuals get work. And if you're the hustler who does get one of the few jobs, it just means that somebody else—or, rather, three somebody elses—is not getting that job.

Meanwhile, charity will simply never have enough resources to provide a decent safety net, even if we are all pressed harder to give. For example, after the financial crisis, food stamp spending doubled over the next several years—a surge of tens of billions of dollars, way beyond the capacity of private charity. The fast ramp up of spending on unemployment benefits was even larger.

In the wake of Hurricane Sandy, you won't hear public officials—even conservatives like Chris Christie—saying that devastated towns should pull themselves up by their bootstraps. No one thinks that government should walk away with the recovery job only half done.

Likewise, we should never walk away from the victims of man-made economic disasters when they are still suffering acutely. Yet that is what existing public policy is doing right now. That's worth pondering as billions of dollars in emergency aid is sent to the Northeast.

Comments

I believe the title of David Callahan's article is one of the best arguments I've heard supporting government intervention in the economy. Now Romney's brilliant idea to dismantle FEMA might guarantee Obama's reelection. A victory for those who believe there is rationale for governments to intervene for reasons beyond going to war. 'Sandy, Keynes and war': http://www.dpeon.com/english/62-sandy-keynes-and-war.html